With all of the turmoil and uncertainty about the stock market, here six good quotes from Warren Buffet:
1. The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.
2. The most common cause of low prices is pessimism – sometimes pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer.
3. Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.
4. Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.
5. The stock market is designed to transfer money from the active to the patient.
6. If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.
No state has more experience with retail clinics than Minnesota, the birthplace nearly eight years ago of MinuteClinic, which still dominates the field even as competitors crowd in. An independent, nonprofit coalition of doctors, insurers, consumers, and employers called MN Community Measurement annually rates health clinics’ and doctors’ practices statewide.
The most recent report card from the group, based on data from 2006, awarded MinuteClinic the highest marks in Minnesota for treating children 2 to 18 years old for sore throats, giving it a score of 99%. The lowest grade: 26% for a doctors’ group.
Quoted from today’s Boston Globe article “Upbeat Diagnosis for Clinics,” following up on the controversy in Massachusetts about CVS planning to open dozens of medical clinics. More here:
Mayor Thomas M. Menino of Boston and other critics have warned of inferior care driven by an unquenchable profit motive. He and others predicted that in the name of convenience, patients would sacrifice an ongoing relationship with a doctor.
But interviews with a dozen independent researchers, insurers, and regulators in other states painted a far more positive portrait. Increasing evidence, they said, suggests that when patients are treated for sore throats and other minor illnesses at retail clinics, the care may actually be as good as – if not better than – in more traditional doctor offices.
From today’s San Diego Tribune, “New Incentives, Not Fiscal Stimulus, Are the Best Way to Bolster a Slowing Economy”:
The bottom line on fiscal stimulus to stave off or ameliorate a recession is this: None is needed for that purpose that wouldn’t be good policy under more normal circumstances. Low marginal tax rates on income, capital gains and dividends are always good policy and largely pay for themselves by stimulating economic activity. They need to be lower, but the first urgent priority is to avoid making them higher by letting the Bush tax cuts expire and to make that clear as soon as possible to end the uncertainty.
Corporate tax rates should be lowered at least to the level of those of our trading partners and lower still if we can get our minds around the fact that corporations don’t pay taxes, people do.
Eastern European countries are way ahead of us in fundamental tax reform as they implement flat, low income taxes. Do we have to sink to their previous levels before we have the courage to implement fundamental reform? When will we learn that what is taxed is destroyed; so taxes on consumption that exempt saving is key to continued dynamic income expansion. We don’t need election-inspired makeshift rebate goodies from Washington under the guise of economic stimulus. We need to get real with fundamental reform worthy of this great nation.
~Bob McTeer, former president of the Federal Reserve Bank of Dallas
From Walter Williams’ column today “Subprime Bailout“:
As with most economic problems, we find the hand of government. The Community Reinvestment Act of 1977, whose provisions were strengthened during the Clinton administration, is a federal law that mandates lenders to offer credit throughout their entire market and discourages them from restricting their credit services to high-income markets, a practice known as redlining. In other words, the Community Reinvestment Act encourages banks and thrifts to make loans to riskier customers.
The Bush bailout plan for the subprime crisis is a wealth transfer from creditworthy people and taxpayers to those who made ill-advised credit decisions, and that includes banks as well as borrowers. According to Temple University professor of economics William Dunkelberg, 96% of all mortgages are being paid on time. Thirty percent of American homeowners have no mortgage. Delinquency rates were higher in the 1980s than they are today. Only 2 to 3 percent of all mortgages are in foreclosure. The government bailout helps a few people at a huge cost to the rest of the economy.
Government policy got us into the subprime mess and government’s measure to fix the mess is going to create more mess.
From Thomas Kuper at Human Events: “I thought it would be interesting to do a compare and contrast between a champion of the free market (Milton Friedman) versus a champion of government (Hillary Clinton).” Here are a few examples:
“The unfettered free market has been the most radically destructive force in American life in the last generation.”
~First Lady Hillary Clinton in 1996 stating her troubles with the free market
“What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.”
~Milton Friedman, Wall Street Journal, May 18, 1961
“Too many people have made too much money.”
~First Lady Hillary Clinton condemns the insurance industry, feeling it’s not fair that certain businesses are making ‘too much money’
“‘Fair’ is in the eye of the beholder; free is the verdict of the market. The word ‘free’ is used three times in the Declaration of Independence and once in the First Amendment to the Constitution, along with ‘freedom.’ The word ‘fair’ is not used in either of our founding documents.”
~Milton Friedman, WSJ, Mar. 7, 1996
MUMBAI — Reliance Power Ltd.’s 117 billion rupee ($2.98 billion) initial public offering has been set at 450 rupees a share, company Chairman Anil Ambani said.
India’s largest capital raising closed to record subscriptions as investors submitted bids valued at more than 7.5 trillion rupees. Demand for the issue, which was open for subscriptions between Jan. 15 and Jan. 18, exceeded supply by 72.9 times.
“This is the largest-ever subscription in the history of global capital markets. It received applications from more than five million retail participants,” Mr. Ambani said.
From “Economics: Public and Private Choice” by Gwartney, Stoup, Sobel and Macpherson:
Pitfall #2 to Avoid in Economic Thinking: “Good intentions do not guarantee desirable outcomes.”
In a Sunday NY Times article “Unintended Consequences,” Freakonomics authors Steven Levitt and Stephen Dubner explain why “do-good” laws often fail:
1. The Endangered Species Act is actually endangering, rather than protecting, species.
2. The Americans with Disabilities Act, enacted in 1992, has led to a sharp drop in the employment of disabled workers.